Should penalty rates be abolished?

“Great, there go our penalty rates,” remarked a friend on 7 September upon hearing Tony Abbott had won the election. Another mate, a small business owner, uttered similar words, only he was gleeful rather than sardonic. Two people, both intelligent, expecting what Abbott has clearly said he will not do.

Abbott’s position is that he’d run industrial relations policies past the Productivity Commission and would leave such decisions to the independent umpire – the Fair Work Commission – the same umpire that rejected a push by employers earlier this year to cut penalty rates.

And yet a fear (or joy) persists among many people at the prospect of it becoming a reality in this term of government.

One reason for this obstinate perception can be attributed to the Labor campaign, with Bill Shorten and Kevin Rudd repeatedly raising it as a foregone conclusion. Even having the PolitiFact adjudicators label the accusation as ‘mostly false’ didn’t deter the claim that “penalty rates will be in the gun”.

Speaking of guns, the business-owner friend of mine justified the abolishment of penalty rates on the basis that “no one is holding a gun to [his employees’] heads forcing them to work weekends”. This ignores the metaphorical gun called cost of living, or capitalism, or rising inequality, all of which compel people to sacrifice their Sundays in order to pay their mortgage and school fees.

If employees are going to miss out on family time, rest days and special occasions because of work, they should be rewarded for it. That’s the (logical) argument from the usual suspects. It’s made illogical, though, by the Australian Council of Trade Unions, which produced this clip to draw the conclusion that Tony Abbott therefore doesn’t care about vulnerable women fleeing violent situations.

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It’s an implausible and somewhat nasty connection to make, the kind destined to drive further away the very stakeholders the unions need to engage over the next three years.

One of those stakeholders is Nick Xenophon who has just been reelected to the Senate. He put forward legislation last year calling for penalty rates to be removed for small businesses – those with fewer than 20 employees. He predicts such a move would enhance flexibility in sectors that are struggling, particularly retail, tourism and hospitality.

But that argument needs some serious help. When the case for change was put to the Fair Work Commission in March, the judgement included terms like “no reliable evidence”, “not persuaded”, and “support of the claims was, at best, limited”.

Here’s the real challenge with a bill like Xenophon’s ever coming into effect. Small businesses already struggle to retain staff because many talented employees are lured by the dollars, incentives and opportunities offered by the big end of town. If small businesses were to be exempt from paying penalty rates, it’d give their employees yet another tempting reason to leave.

This turnover of staff would subsequently increase their recruitment and training costs, which in all likelihood would exceed what they were initially paying in penalty rates. So, if penalty rates are going to be removed, it’s best to abolish them across the board for all employers, not just the small ones.

The curious thing about Xenophon’s position is that he isn't your typical rightwing neo-liberal seeking to expand the free market. On many issues such as climate change, poker machines, and the grocery domination of Coles and Woolworths, he is more leftist than conservative.

If employees are going to miss out on family time, rest days and special occasions because of work, they should be rewarded for it. That’s the (logical) argument from the usual suspects.

This demonstrates the fight in store for the unions – and it highlights why they fought so hard and spent so much to get Rudd elected in 2007. If even our moderate politicians are of the view that penalty rates are exorbitant, maybe change really is imminent this time.